Losing one’s job is an unfortunate event. However, it is not something which a person can predict. Financial complications and monetary constraints often accompany a lost job. In such a situation, paying back the Home Loan EMIs on previous loans on time seems like a monstrous job. Here are some ways which can help you reduce the burden in such a situation:
Insurance Schemes to the rescue:
As they say make hay while the sun shines, if you have considered such a situation and are prepared for it, you have nothing to worry about. Several banks offer insurance schemes known as job loss mortgage insurance, which ensures that your loan payments are made if you are out of work. Your coverage can take care of your EMIs for a specified amount of time, thus allowing you to look for a new source of income without having to worry about your EMI payments.
Bank on your Savings:
Saving a part of your income is always important. It is the saving which will get you across on a dry day. Saving comes extra handy in situations like these. If a proper plan and a strict budget are followed, your savings can cover your EMI payments as well as your living expenses for a while till you find yourself a new job.
Take the bank into the loop:
It is essential for your lender to understand that you are serious about your financial obligations. In cases of extreme financial crisis, you should talk to your bank and take them into the loop about your situation. This would allow your bank to suggest a lot of different options to you. They can also help you delay your payments or even change or lower the interest rate to help you make the payments if needed.
Mull over loan modification and sale:
In case of dire situations modifying the terms of your loan is another option which can be considered. This could mean a lot of different things depending on what your bank considers to be the best for you. The options could range from changing the tenure of the loan to even changing the interest rates. Another solution could be a possible sale of your property.
Review your loan protection plan:
Most banks have a loan protection plan that provides a cover for the loan, in case something happens to the borrower. Usually, the loan protection plan only covers death, but now banks like ICICI and HDFC have started including critical illness and job loss (ICICI Lombard, HDFC Ergo). It is advisable for you to review your loan protection plan in such a situation.
Losing your job when you have outstanding payments is not an ideal situation, but at the same time, it is also not the end of the world. There are a lot of options you can consider to help you reduce your financial woes, which keep varying from case to case. The most important thing is to stay calm and to find all the options that you have patiently.